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Ficb213 Corporate Finance - the Effect of Dividendpolicy and Firm Value in Malaysian Stock Exchange

Autor:   •  January 10, 2016  •  Study Guide  •  1,265 Words (6 Pages)  •  1,235 Views

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FICB213 CORPORATE FINANCE

SEMESTER2 2015/2016

ASSIGNMENT QUESTION

TITLE: THE EFECT OF  DIVIDENDPOLICY AND FIRM VALUE IN MALAYSIAN STOCK EXCHANGE

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OBJECTIVE

The objective of this assignment is to assess students’ ability in applying the concepts and theories of Corporate Finance (FICB213) as well as analyzing major issues in corporate finance relating to dividend decisions.

INSTRUCTION                        

  1. Form a group of 5 maximum.
  2. Each group is required to choose any THREE companies from the same industry sector(please exclude the finance and banking sector) which are listed on the Bursa Malaysia for which you have access to the latest minimum of 10 years financial statements (e.g. 2000 to 2014) and other financial information of the companies including dividend policy.

        **It is important that you check that the companies you choose are paying dividends within the minimum 10-year period. Please register yourself in the Moodle Uniten and post your companies chosen in the Moodle to ensure no groups are choosing the same companies. The softcopy of the financial statements for all companies used in the assignment must be submitted together with the report.

REQUIREMENTS:

  1. Write a brief introduction on the selected companies including their background and business activities.
  • All data are available at Thompson Reuters database in the library.Refer to the guideline on how to use the database.  Besides, the financial information relating to the companies can also be downloaded from the bursamalaysia websites. The background information and the annual reports regarding the company can also be accessed through their own company’s web page.
  1. There is no strict format for the report but as a general guidance you can follow the following outlines:

Executive Summary

  • Objectives
  • Summary of the findings

1 page

Introduction and Background Information

  • Relating to the companies.

1-2 pages

Literature Review

  • Summarize the theory of dividend policy, MM Dividend Irrelevance Theory &Bird-in the Hand Theory, Tax Preference Theory and etc.
  • Dividend policy and Firm Value
  • Summarize the findings of research or studies relating to dividend and firm value.

(Please refer to Moodle Uniten of the important papers/journals that you must include)

3-5 pages

Analysis 1 : Comparison on Dividend Policy

  • Based onat least 10-year period data, compare and analyse the trend of dividend policy for each of your company by showing the following:
  • Dividend per share
  • Dividend yield
  • Dividend payout

Use charts to illustrate the trend of dividend for each company that you have chosen and the overall three. Comment on the trend of dividend for each company and the overall three.

5-10 pages

Analysis 2 : Comparison on Firm Value

  • Based onat least 10-year period data, compare and analyse the trend of monthly share prices and yearly firm market value for each of your company:
  • Market Value (yearly) = Closing share price X No. of Shares outstanding

                                        (as at the balance sheet date)

  • The data of share prices can be retrieved from Thompson Reuters database in the library.

5-10 pages

Analysis4:a)  The Effect of  Dividend Policy on Firm Value

  • Run a simple regression using Excel by combining all your data (e.g  for 3 companies x 15 years = 45 observations) and examine how dividend policy affect firm value.
  • Analyse and interpret your results from the Excel output.  

(Refer to the guideline how to run regression using Excel)

  • Remember, you are testing two null hyphotheses here:
  1. Ho : Beta , Bx = 0, or There is no significant relationship between Dividend Policy and Firm Value

5-10 pages

Conclusions

  • Can you conclude that dividend policy affect  firmvalue?
  • Does your result consistent with existing theories and literature review?
  • Explain the limitations of your findings and recommend ways to improve the validity of your findings.

1-3 pages

Bibliography

  • Journals, articles, books and etc as a reference.

Appendix

  • Attach all relevant data sources regarding the companies.

  • The report must be typed using Microsoft Word and bind in A4 paper with single spacing throughout text (justify the paragraph). No hand written is accepted for the writings and graphs.
  • Marks will be given for the clarity and quality of your explanation and discussion. Your professionalism in terms of the presentations of your analysis is heavily counted in the report. Any spelling mistakes or English grammatical error will only reduced your marks and the quality of your discussion.
  • Please submit both softcopy (through email or moodle) and hardcopy of your assignment to your relevant lecturer. The softcopy will be submitted to Turnitin to check for any evidence of copying or plagiarism among the groups. For the hardcopy version, no need to include Appendix as it already in the softcopy.

Submission date: 28/12/2015 (Monday), Week 10, before 4.00pm


Marking schemeFICB213 CORPORATE FINANCE

Criteria

 

Low

Fair

Above average

Excellent

 

 

 

1

2

3

4

 

 

Weight

Marks

1. Introduction.

1

Poor overview of issues and theories dividend policy and firm value.

Fair overview of issues and theories of dividend policy and firm value.

Good overview of issues and theories of dividend policy and firm value.

Very clear and comprehensive overview of issues and theories dividend policy and firm value .

2

2. Organisation of the literature review.

1.5

The report appears to have no direction, with subtopics appearing disjointed. No reference to  past studies on dividend policy and firm value from various journals.

Lack of flow from one section to the next, and the topics seem to be disjointed. Little reference to past studies on dividend policy and firm value from some relevant journals.

There is a basic flow from one section to the next, and most sections or paragraphs follow a natural or logical order. Some references are made to past studies on ,dividend policy and firm value from relevant journals.

The report goes from general ideas to specific conclusions with logical arguments.  Sections and paragraphs flow together smoothly. Adequate references on past studies on,dividend policy and firm value from most of the relevant journals.

4

2. The analysis and ratio calculation in comparison of the change of ,dividend policy and firm valuein the Analysis 1 -3.

4.5

Unable to compute and analysethe dividend payout and firm value and poor description of tools, data and the analysis of the relationship.

Computation of dividend payout and firm value is incomplete and description of tools and analysis of the relationship are vague.

Computation of relevant  ratios and data is correct, description of tools and analysis and comparison of the relationship are not clearly justified.

Computation of relevant  ratios and data is correct, description of tools and analysis determination of the relationship are clearly justified. Able to identify reasons for major changes in  dividend policy.

12

3. Quality of regression analysis in the Analysis 4 which include evaluation of different dividend policies anddiscussion on the effect of  ondividend policy and firm value.

2.5

Poor description and inadequate analysis of the findings on dividend policy and firm value and unable to relate how  thedividend policyaffect firm value.

Adequate description and analysis of how  dividendpolicyaffect the  firm value but unable to relate the  dividend policy tofirm value.

Adequate description and analysis of how  affectthe dividend policy and firm valueand able to relate the dividend policy and firm value.

Comprehensive description, analysis and discussion of how  thedividend policyaffect firm valueand able to provide logical and sound explanations.

10

4. Conclusion

0.5

Conclusion which is irrelevant to the analysis.

Descriptive or superficial conclusion.

Relatively clear conclusion and relates to the analysis.

Well justified conclusion that relates to the analysis.

2

Total points

7.5

 

 

 

 

30

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